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New Bank Debt Collection Tools
To Lower Bank Chargeoffs and Defaults

Bank debt collection efforts are greatly increasing due in large part to the economic crisis affecting markets and consumers globally. Banking institutions are looking for new tactics and implementing new measures to step up bank debt recovery.

The U.S. economy is experiencing a recession, and with growing unemployment, a sluggish real estate market, as more homeowners fall behind on their home loans and face more foreclosures, along with decreasing property values, as well as a credit crunch, consumers are fighting just to stay afloat.

Read the latest banking & credit union debt collection industry news, updated daily.

Because of years of steadily rising consumer debt, banks are facing ever growing credit card delinquencies and defaults, as consumers struggle to pay for the necessities. Financial institutions are trying new strategies to help with bank debt collection efforts.

Here are some suggested bank debt recovery tactics, some of which might help with your bank debt collection as well.

  • Offer flexible plans for customers experiencing financial hardship.
  • Create "hardship" programs for borrowers who are late with their payments.
  • Extend or lower payments, interest rates, or lower fees when you anticipate customer payment problems.
  • Create communications channels where customers can openly discuss their issues. By proactively reaching customers early, you can prevent larger problems later.
These suggestions, in addition to existing internal collections processes, are designed to catch potential problems early on, and prevent them from becoming excessively delinquent.

All banks have a percentage of customers who will go into delinquency, but this economy calls for new measures, as it is affecting even the banks' best customers: those that always pay on time, and keep within safe credit limits. For instance, you might want to pay attention to the customer who suddenly start to pay the minimum balance if they've had a history of paying more than the monthly minimum. It could be a sign of a future problem intensifying.

Another "must-do" for institutions with growing bank debt collection problems is quickly getting rid of, and outsourcing bad debt accounts. If you implement some of the earlier suggested tools, you should be able to identify very early on, and be able to separate the customers that you can work with through payment arrangements from the more problem customers. These problem accounts need to be identified early in the process, and handed over to an outside collection agency. Failing to do so, not only decreases your likelihood of getting paid on them at all, it costs you far more in time, resources, etc. Debt portfolio scoring is another tool that can help you quickly identify problem accounts before they default.

Benefits To Your Bank

A third party collection agency can be more cost effective for many of your delinquent accounts. Debt collection focused on retaining banking customers can help recover negative customer balances, if introduced early enough. Here are some areas where an agency specializing in bank debt collection can be more successful:

  • Demand Deposit Accounts (DDA)- A debt collection agency can recover on those overdrawn demand deposit accounts before they are charged off, thereby helping tremendously with customer retention. For example, by using this strategy, you can improve on your overdraft program, and retain more checking account customers BEFORE charge-off.

  • Loans- By implementing a systematic approach to loans (unsecured, secured, student loans, auto, home loans, commercial, credit cards, etc.) means faster and maximum recovery if these are outsourced at a specific interval.

  • Automation- Collection agencies specializing in bank debt collection will offer automated online processes to monitor account activity. You should be able to notate partial payments, paid in full's, as well as automatically upload delinquent accounts online effortlessly.

    An added cost benefit is this will free up internal staff considerably from having to handle collection calls, letters, visits, etc., to handle more important banking tasks.

No account should be held in house past 60 days or so, before being turned over to third party collection agencies. 60 days is usually long enough to determine whether you're dealing with a problem account. And the sooner the account is handed over, the better the collection agency's success rate will be to recover at least some of your money.

If your bank or credit union would like a debt collection agency quote, complete the brief form below. One of our consultants will contact you shortly.


Collection Agency Quote Request
Please note that all fields followed by an asterisk must be filled in.
Company*
Your name, and position*
E-mail Address*
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Street Address*
City*
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Business Phone*
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What services are you interested in?*
Bank/Credit Union Collections
Commercial Collections
Consumer Collections
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NSF Check Collections
Debt Portfolio Scoring Analysis
Total dollar amount of accounts?*
How often do you need these services?
Additional or Standalone Services
Credit Reporting Services to 3 Bureaus
Consumer/Commercial Credit Check Services
Debt Portfolio Scoring Analysis
Skip Tracing Services
Electronic Check Deposit (eliminate bank trips to deposit checks)
Check Guarantee Services (never get burned with another NSF check)
e-Merchant Terminal (accept credit/debit cards online, and remotely with any cell phone)
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